HC Deb 06 November 1957 vol 577 cc153-65
The Minister of Pensions and National Insurance (Mr. John Boyd-Carpenter)

I should like, with permission, to make a statement.

First, war pensions. The Royal Warrant is being amended so as to raise the basic rate of pension for 100 per cent. disablement by 17s. 6d. a week, with proportionate increases for the less severely disabled. Thus, the rate for a private with 100 per cent. disablement will be raised from 67s. 6d. to 85s. The standard rate for war widows with children or for widows over 40 years of age or incapacitated will be raised by 13s. 6d., with appropriate increases in the rates for their children. Thus, a private's widow in these categories will have her own pension increased from 52s. 6d. to 66s.

There will also be increases in certain of the supplementary allowances paid to war disablement pensioners. For example, the normal maximum rate of constant attendance allowance will be increased from 30s. to 35s. and the rate for the most serious cases from 60s. to 70s. The unemployability supplement payable to men whose war disability prevents them from working will be increased from 45s. to 55s.

Application for the new rates will not be necessary. They will come into force on the first normal pay day after 26th January next. The additional cost to the Exchequer will be £16½ million in a full year.

I will circulate a list of all the principal changes in the OFFICIAL REPORT.

I understand that corresponding improvements will be made in disability awards administered by the Service Departments.

I now want to say something about the tobacco token scheme. This benefit in kind has been much criticised as unfair between pensioner and pensioner. We felt, however, that the scheme could only be dispensed with at a time when improvements in benefits were being made so that due account could be taken in that way of the position of those affected by its withdrawal. We have now decided, subject to the necessary legislation being approved by Parliament, that the scheme should be ended at the same date as the increased pensions which I am about to announce come into force.

Under the Bill which I am presenting today and which, with an accompanying explanatory White Paper and a report by the Government Actuary will be available in the Vote Office at 4 o'clock this afternoon, it is proposed that the standard rates of National Insurance retirement pension at minimum pension age, and of unemployment and sickness benefit, shall be raised from 40s. for a single person to 50s. and from 65s. for a married couple to 80s. The new standard rate of widow's pension will also be 50s. The widowed mother's allowance including the payment for the first child, will go up to 70s.

The higher rates of pensions and benefits under the National Insurance Scheme, together with the increases in Industrial Injuries benefits which I shall mention in a moment, will add about £177 million in the first full year to the expenditure of the two Funds. As the House knows, higher benefits under a contributory scheme of National Insurance must carry with them a higher contribution. Accordingly, the contribution paid by the employed man will be increased by 2s. to become 9s. 5d. and that paid by his employer by 1s. 11d. to become 8s. 1d., including in each case the separate National Health Service contribution. The contribution for the self-employed man will be increased by 2s. 3d. to become on the same basis 11s. 6d.

There will be corresponding increases in other contribution rates. These increases in contribution will carry with them an immediate increase of about £35 million a year in the supplement from the Exchequer and, in addition to this, the Bill will, of course, have increased substantially the long-term Exchequer liability.

Under the Industrial Injuries Scheme, the standard rate of injury benefit and of the 100 per cent. disablement pension will be increased from 67s. 6d. to 85s. The widow's pension of 45s. will be raised to 56s.

In view of the intended repeal of the tobacco token scheme, we propose that non-contributory old-age pensioners should receive a special addition to their pensions of 2s. 4d. a week, the cash equivalent of the tobacco token.

Our aim is to bring the changes in National Insurance benefits and contributions into force at the earliest possible moment. If the Bill is passed into law this month, it is intended that the increased rates of retirement pensions and widow's benefit shall operate by the end of January and that the other new rates of benefit and the new rates of contributions shall come into force by early in February.

Finally, National Assistance. The increased benefits and pensions which I have announced will, of course, have to be taken into account in calculating assistance grants to those who are drawing supplementary assistance. I have, however, received proposals from the National Assistance Board for increases in the assistance scales with effect from 27th January, which, the Board tell me, take into account the proposed repeal of the tobacco token scheme. The proposed increases are 5s. a week for a single householder and 9s. for a married couple, with appropriate increases to the other rates. The Government have accepted the Board's proposals, and I have already laid the necessary draft Regulations.

The House will appreciate that, in present economic circumstances, changes in the main rates of benefit larger than ever previously made since the inception of the schemes concerned are not easy to effect and must involve some sacrifice by the community as a whole. They are a clear indication of the determination of Her Majesty's Government to provide the fullest possible measure of help for those who have suffered in the service of their country, for the old, for the sick, and for the unfortunate.

Mr. Marquand

The whole House will be glad to hear what the right hon. Gentleman had to say about increasing war pensions. We on this side of the House are certainly very glad that it has been possible to make these increases, and we have no hesitation in recommending Parliament to bear the necessary cost. I hope, however, the right hon. Gentleman will feel that we can deal with the question of war pensions—as he has dealt with it this afternoon—quite separately from that of National Insurance, and that we can have a separate debate on war pensions. The right hon. Gentleman will agree that it is at least two years since we had a debate on war pensions, and it is time that the House had another.

As for what the right on. Gentleman said about the proposed increases in National Insurance—and, of course, we are glad that Industrial Injury benefits are correspondingly increased, as has always been the custom—we are glad that the pressure we brought to bear in February last—[HON. MEMBERS: "Oh."]—and again in August, has had some effect. Though obviously there will be very little time left for me this afternoon to go over all these complicated figures, I feel that, before we enter on the debate next week, I might be allowed to ask the right hon. Gentleman whether he is aware that the niggardly increases now proposed will cause deep disappointment to all the old people and the unemployed and the sick.

Does the right hon. Gentleman really think, despite arguments which have been advanced from both sides of the House about the tobacco tokens, that, for an increase of only 10s. a week, it is wise to withdraw the whole of the value of the tobacco token? When he has worked out this proposed increase in National Insurance pensions and the National Assistance grants and has taken into account the withdrawal of the tobacco tokens and the anticipated and inevitable increase in rents which most of these people are going to pay, can he tell us what amount is left over? Am I wrong in saying that, so far as National Assistance recipients are concerned, they will not benefit at all, that they will have no increase in their standard of living whatsoever under these rates? So far as the insured old people are concerned, those who do not smoke will get a tiny benefit, and those who do will get scarcely anything at all.

Will the right hon. Gentleman tell the House whether, before he formulated these proposals, he consulted the Trades Union Congress—

Mr. Logan

Their members are going to pay.

Mr. Marquand

If the right hon. Gentleman tells me, as he may well do, that it would be constitutionally improper to hold discussions of that kind, will he undertake to do so before we have the debate in this House—

Dame Irene Ward

Why?

Mr. Marquand

—because the Trades Union Congress, representing as it does the vast majority of people who have to pay these increased contributions, will need to have its point of view taken carefully into account before this House enters into any debate?

Is the right hon. Gentleman aware, for example—is the House aware, are hon. Gentlemen and hon. Ladies behind the Minister aware—that the increased contribution now required will amount to some 7 per cent. of the wages of the lowest-paid workers? What do hon. Members opposite representing farming constituencies think about that? I should like to have the Minister's confirmation of my rapid calculation that this may represent 6.7 per cent. of the wages of the minimum paid agricultural workers at the present time. Is the right hon. Gentleman aware that we on this side of the House regard that proposed level of contribution for the lower-paid workers as completely intolerable?

We on this side of the House will do nothing to hamper the passage into law of measures which will provide some increase for the old people, but we are quite unable to promise that the debates will be without controversy. We shall need a very searching inquiry and strong effort to try to improve the Measure which the right hon. Gentleman brings forward.

Mr. Boyd-Carpenter

Regarding war pensions, as the right hon. Gentleman knows, the changes are effected by amendment of the Royal Warrant, which does not, therefore, in that way come before Parliament Any question of a debate is not for me. No doubt the right hon. Gentleman and his right hon. Friends, if they so wish, will deal with that matter through the usual channels.

I noted the right hon. Gentleman's reference to the level of the proposed increase in National Insurance retirement pensions and other benefits. I am bound to say I found the adjective "niggardly" a little difficult to square with proposals which raise the level in real terms to a higher level than these benefits have ever attained, and in real terms to 12s. for the single person more than they were raised to by his right hon. Friends in October, 1951.

The right hon. Gentleman is quite wrong in saying that recipients of National Assistance will gain nothing from this. They will, of course, gain the full extent of the National Assistance increases which were included in my statement and come into effect at the same time as the improvements in National Insurance. Regarding consultation with other bodies, I have had the advantage of advice on this matter from the Trades Union Congress and other bodies who have been good enough to send it to me. But beyond that, consultation in the more strict sense is not possible in a matter which is the responsibility of the Government.

Finally, as regards contributions, I think the mathematics of the right hon. Gentleman are broadly accurate, inasmuch as the full stamp in February, excluding the Health Service contribution, that is, the contribution from both sides, will amount to approximately 7 per cent. of average earnings. The right hon. Gentleman will be aware, however, that when the 1946 Act was taken through this House the contributions then proposed amounted to a slightly higher level of average earnings, and even when they came into law in 1948 represented 6.7 of average earnings. So I think I can say in this respect that the proposed contributions are not out of line with precedent.

Sir I. Fraser

Does my right hon. Friend appreciate that the British Legion and ex-Service men's organisations generally will regard the proposals he has made as going a long way towards what they would have wished and as being generous? If the proposals are taken into account with what has been done in the last few years, they represent in many ways an even more generous provision for the old and for some of the most severely disabled. Will my right hon. Friend believe me when I say that I think the great majority of ex-Service men throughout the country will also think that this is a fair and generous settlement?

May I, then, ask my right hon. Friend whether he will join me in inviting the taxpayers and the workers throughout the land to accept our thanks, that is, the thanks of the disabled ex-Service men, for having given us, so to speak, our turn at the front of the queue for a few brief moments? May I hope that all in this House and in industry generally will co-operate to see that the real value of these awards is maintained? Finally, may I ask when the Royal Warrant and the appropriate Instruments will be available for us to study them?

Mr. Boyd-Carpenter

I am grateful for the first part of the question of my hon. Friend, and I fully accept what he so well said in the second part. The Royal Warrant is being submitted at present, and I hope it will be available in the very near future for consideration. As my hon. Friend knows so well, the Royal Warrant is not formally laid in this House.

Mr. Hale

is the Minister aware that, on the basis of only 25 million contributors, the proposals mean an increase in contributions of about £130 million a year and that, if he adds that to the saving in tobacco coupons and to the very clear and substantial saving in National Asistance by the swindle of giving reduced increases by comparison—which they have done before—he is really going to make a profit out of this for national funds? Is the Minister not perpetrating a swindle on the old-age pensioner by giving these very meagre increases, which are much less than was expected or forecast, and which require this very high increase of contributions?

Mr. Boyd-Carpenter

The hon. Gentleman cannot have it both ways. He cannot at the same time complain of the burden of the increased contributions and then say that the community is not making a sufficient effort to help its older section. In truth and in fact, this does, as I said in my statement, involve some sacrifice by the community as a whole for the aid of its older people.

Mr. Hale

Give us the figures. The Minister has them all.

Mr. Boyd-Carpenter

I will give them to the hon. Gentleman. If he likes to go to the Vote Office in an hour's time, he can have them all. As the hon. Gentleman has calculated, there will be a very heavy contribution increase for National Insurance, bringing in, I think, about £167 million, and for Industrial Injuries over £20 million. I think those are burdens which will be willingly accepted by our fellow-countrymen as a means of doing something to restore the balance in favour of the retirement pensioners.

Mr. Marquand

The right hon. Gentleman has not given the House the figure which was asked for. What is the saving in National Assistance?

Mr. Boyd-Carpenter

The figure for National Assistance, which I do not think I was asked for by the Member for Oldham, West (Mr. Hale), is this: on the face of it, the increased assistance rates will cost £26 million. That will be more than offset by the saving of Assistance amounting to £34 million, that will ensue, owing to the reduction, which I have no doubt the House will welcome, of the number of people on assistance.

Mr. Nabarro

While welcoming my right hon. Friend's statement and the comprehensive proposals for all pensioners, will he tell the House whether he has in mind, as a result of the increased retirement pensions scale, an alteration in the present earnings rule?

Mr. Boyd-Carpenter

There are no proposals in the Bill relating to the general structure of the scheme. This is substantially a rates bill.

Mr. Wade

While welcoming the increases in pensions, so far as they go, may I ask the Minister two questions about contributions? Has he finally closed his mind against any proposals for relating contributions to the earnings level of the contributor? Secondly, as regards the self-employed, who come into a rather special category and do not receive all the benefits from National Insurance, would the right hon. Gentleman consider introducing a sliding scale of contributions?

Mr. Boyd-Carpenter

We have not closed our minds to any proposals on the subject mentioned in the first part of the hon. Gentleman's question, as indeed my right hon. Friend the Prime Minister said from this Box yesterday. The hon. Gentleman will appreciate, however, that any proposals of that kind, of whatever nature, would take a very considerable time to introduce and still longer to have any real effect on pensions. Therefore, the only way to give immediate relief to the large body of existing pensioners is through the machinery of the present scheme. That applies equally to the hon. Gentleman's proposal with respect to the self-employed. When the hon. Gentleman has time to study the figures, which I appreciate he has not yet had, I think he will find that our treatment of the self-employed, as compared with others, is not at all harsh.

Mr. Beresford Craddock

Can my right hon. Friend indicate, with regard to the 100 per cent. disabled ex-Service man, the total that such a person will have under the new increases, taking into consideration the comforts allowance.

Mr. Boyd-Carpenter

As my hon. Friend, with his experience, will appreciate, it depends for which particular allowance the man is eligible. I would rather not give an example which might prove to be exceptional. My hon. Friend will appreciate that the 100 per cent. disabled man will, in a great many cases, be receiving not only the additional 17s. 6d. on the standard rate, but will derive some advantage from the increase in some of the allowances. I shall be happy to furnish my hon. Friend with examples, but I would rather not do so off the cuff.

Miss Herbison

Is it not a fact that the right hon. Gentleman's expression of his Government's care for the sick, old and unfortunate is rather belated and is completely belied by the Government's action in April and August? Is he also aware that our old people will consider the proposed increases completely inadequate? Since the Prime Minister is continually telling the nation that we have "never had it so good", does not the right hon. Gentleman realise that our old people are sick to death of his continual harking back to the real value of the previous increases and what the new values are going to be? [HON. MEMBERS: "Oh."] Cannot our old people have some share, in view of the continual statement of the Prime Minister?

Mr. Boyd-Carpenter

I cannot accept for a moment that this is belated. This is the third change of this kind which this Government have proposed. That which came into effect in 1955 created a new high level of benefits. The proposals which I have just announced carry the work on to a still higher level.

Mr. J. Griffiths

May I ask the Minister one question on a detailed point which I may have missed from his answer? In announcing the increases in war pensions, which we all welcome, he indicated that, in addition, the basic rate of unemployability allowance would be increased. When he came to speak of Industrial Injuries, if I got him aright, he indicated that there would be an increase in the basic rates, but there was not a word about the unemployability allowance. I would ask him, therefore, if it is proposed that there shall be corresponding increases in the unemployability allowance of the Industrial Injuries Scheme?

That is the first question, but there are two other points. In reply to the hon. Member for Huddersfield, West (Mr. Wade), on the Liberal Benches—

Mr. Nabarro

The Liberal Bench.

Mr. Griffiths

I accept the correction—the Liberal Bench—the right hon. Gentleman referred to the statement made by the Prime Minister yesterday. The Prime Minister told us yesterday that the Government were undertaking a study of the longer-term problems of old age. In view of the fact that, since the publication of the Labour Party pamphlet, there have been conferences at Chequers and the Government have been busy talking about it, are we to understand that the Government are undertaking a study of the longer-term problems, including the implications of the growth of voluntary superannuation schemes and the desire of the country for a national scheme? Is he now not convinced that the flat rate contribution, about which we have asked for a long time, has reached a scale at which it becomes an intolerable burden for the lower-paid workers, particularly in view of the fact that National Insurance contributions rank for taxation? The only ones who pay the full insurance contribution are those who do not earn sufficient to pay tax. Therefore, the burden is proportionately greater upon them. In view of that, will the right hon. Gentleman reconsider this matter?

Finally, I ask the Minister to tell us, now or at the time when the Bill comes forward next week as he announced, what the extra amount provided by the Exchequer immediately for these increases will be. Will he set against that the corresponding savings made by dropping the tobacco concession and savings in National Assistance and state how much extra the State will give with one hand and take away with the other, and what is the net increase provided by the State at this moment?

Mr. Boyd-Carpenter

On the first question, on unemployability supplement under the Industrial Injuries Scheme, the right hon. Member is quite right, I did not announce anything in respect of that. Nor did I announce anything in respect of a great many other matters. I hope the House will bear with me, as my statement was long enough, but, as I said, these details will be in the White Paper which will be obtainable in the Vote Office at four o'clock. We are, in fact, dealing with unemployability supplement for industrial injuries and raising it from 40s. to 50s.

Mr. Griffiths

What about war pensions?

Mr. Boyd-Carpenter

The war pension increase of unemployability supplement, which I think I gave, is from 45s. to 55s. I cannot read out a whole long list of figures, which will be in the hands of hon. Members, but I have taken the trouble to secure this information before we have the Bill.

On the second point made by the right hon. Member, in respect of pension schemes, I have really nothing to add to what the Prime Minister said yesterday and what I said in reply to the hon. Member on the Liberal Bench a few moments ago. As the Gracious Speech said, we are continuing to study this matter and certainly do not exclude from consideration the various ideas and proposals to which the right hon. Member referred, but I do not think it would be fruitful or really serve the purpose of Parliament, for me to go into these wide questions in the course of supplementary questions relating to a statement in respect of forthcoming legislation.

Finally, as regards the costs to the Exchequer, there are various figures I could give to the right hon. Member. He may have noticed the most immediate one—which I gave in the course of my speech—that the increased contributions to the two Funds will carry with them automatically under the formula an increased Exchequer contribution of £35 million. He will also recall that, under the provisions of the 1954 Act with respect to deficiency payments, the liabilities of the National Insurance Fund, which will be increased very substantially as the result of these increased benefits, will also impose a very considerable Exchequer liability. I do not think the right hon. Member need be concerned that the community as a whole is not accepting a very serious burden indeed.

Mr. Griffiths

May I put a question?—[HON. MEMBERS: "Oh."] The statement the right hon. Gentleman has given us today is very important, and my hon. Friends will certainly do everything to facilitate the passage of the Bill, but we are entitled to information. The figures must be in his possession. He referred to £35 million as the immediate expenditure by the State. Will he tell us what saving is made by dropping the tobacco concession and in respect of National Assistance?

Mr. Boyd-Carpenter

I want to give the right hon. Member any information I can, and I am grateful for what he said about the passage of the Bill. I did give the figure a few moments ago in respect of National Assistance. The figure on assistance is a net saving of £8 million, the increased cost of £26 million being more than offset by the assumed saving—of course, it is only a calculation, and I would not give it to the House as necessarily a complete figure—of £34 million. The abolition of the tobacco concession will save something of the order of £16½ million. That, again, is not a precise figure, because it depends on the effect on consumption. I ask the House to have a sense of proportion on this matter. Neither of these figures is necessarily of very great relevance against the background of an increase in benefits totalling £177 million a year at once.

Several Hon. Members

rose—

Mr. Speaker

Order. This matter can be debated next week when the Bill conies up for Second Reading.

Present Rate Proposed Rate
Disablement pensions (100 per cent. assessment):
ex-private or equivalent 67s. 6d. a week 85s. a week
ex-non-commissioned officers Increase of 17s. 6d. a week
ex-officers Increase of £46 a year
ex-Regular officers—disablement addition Increase of £46 a year
(The amounts of weekly allowances and terminal gratuities for assessments of less than 20 per cent. will also be increased proportionately.)
Constant Attendance Allowance:
Normal maximum 30s. a week 35s. a week
Exceptional maximum 60s. a week 70s. a week
Unemployability supplement 45s. a week 55s. a week
(The special additional allowances for wife or other adult dependant and first child payable with this supplement (and with treatment allowances) will also be increased from 25s. and 11s. 6d. respectively to 30s. and 15s.)
Allowance for lowered standard of occupation up to 27s. 6d. a week up to 34s. a week
Widows' pensions:
Widow of ex-private or equivalent 52s. 6d. a week 66s. a week
Widows of ex-non-commissioned officers Increase of 13s. 6d. a week
Widows of ex-officers Increase of £36 a year
Allowance for each child:
Other ranks 21s. 6d. a week 25s. a week
Officers £63 10s. a year £73 a year
Rent allowance for certain widows up to 20s. a week up to 25s. a week
Pensions for unmarried dependants who have been living as wives of men deceased:
Other ranks 45s. a week 58s. 6d. a week
Officers £141 a year £177 a year
Orphans' pensions:
Other ranks:
Under 15 years 25s. a week 30s. a week
15 years or over 35s. a week 40s. a week
Officers:
Up to 18 years £99 10s. a year £112 10s. a year
Adult orphan incapable of self-support 40s. a week 50s. a week
Parents' pensions:
Increase in basic means standards used in calculating the need of parents who lost sons as a result of the 1939 War:
From 60s. a week to 70s. a week for one parent and from 90s. a week to 105s. a week for two parents, and comparable increases in the means standards applicable to the parents of officers.
Back to